03 Aug 23

The 411 On Tax Crimes

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Last Updated on: 4th August 2023, 02:01 pm

With tax season in full swing, the IRS will begin auditing any returns that are flagged in their system. Tax evasion is a serious crime, and it usually starts with an examination by mail. If a person cannot justify their actions to the IRS within the allotted time, then the agency will determine if the activities warrant further investigation. The government doesn’t mess around when it comes to being defrauded. They can freeze bank accounts, put liens on assets, and send you to jail.

Being accused of a tax offense, or being investigated for one, can be a scary time in your life. It’s imperative to have a knowledgeable criminal defense lawyer who has plenty of experience in helping others with similar charges. Anyone that is convicted of the crime of tax evasion can be sentenced to five years in prison for each count. People go to jail for tax crimes all the time, so it’s imperative to have an attorney to protect your rights.

Understanding Tax Crimes

Tax crimes can be divided into two categories, failure to file a return and evasion. Failing to file a return doesn’t negate the responsibility of paying your taxes. To prove your guilt, the IRS must show that a return needed to be filed for the years in question. They must also prove that you willingly failed to file the required return. There are different ways that this can be accomplished. They can use income that was hidden from the government, or there may be tax deductions you claimed that you were not entitled too.

The IRS Puts Their Focus on Tax Preparers

Tax preparers are at the focus of many IRS investigations. Federal law enforcement makes tax crimes a high priority, but they are more interested in who filed the tax forms. Accountants and those that prepare taxes find that it’s a great way to make a living. Unfortunately, every form that is submitted has the chance of coming back on you. Remember you put your name, address, and phone number at the bottom of each return. The IRS can use this information to track you.

Taxpayers are often charged with aiding and abetting others. This means they know the numbers they are filing on these returns are fictitious, but they do it so that the person can get a higher refund. In many cases, the accountant or tax preparer may be given some of the refunds as a payment for their help. The problem is it’s often tricky to get these charges to stick. The government must be able to prove that the accountant knew that the numbers or deductions were false, and they chose to file it anyway. Though it can be done, it’s hard to determine foreknowledge.

Investigating A Tax Preparer

A defense we often use is that the preparer did not know of any wrongdoing. The IRS knows that the clients are a great source of information. So the government begins their investigation by interviewing as many former clients as possible. It’s not uncommon for an accountant to find out about an ongoing investigation by customers. The federal government tries to catch everyone off guard to collect as much evidence as possible.

The government wants to find out how the tax preparers are paid for their work. It can make a huge difference in whether there will be a criminal investigation or not. Any portion of the refund that goes back to the preparation for their labor is considered suspicious. If the preparer is getting a kickback from the refund, then it appears that there is an incentive to inflate the amount.

Many times, the tax preparer has taken a very low service fee, but in return, they do many returns. This leads the IRS to believe that the low filing costs are associated with bringing in more money when the refund arrives.

Resolving Tax Crime Cases

During our many years of defending people charged with tax crimes, we find that often a criminal investigation can be avoided. Sometimes it’s just pure luck, but in other cases, we can take definitive steps to change the odds. The number one reason why you need a lawyer is that much of what they do can resolve or lessen the charges from a tax crime. Before talking to any federal law enforcement officials, get a lawyer on board. Remember, anything that you say to these officials, can and will be used against you if you go to court.